First charge mortgages



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One of the most popular forms of secured finance across the UK, these types of loans allow customers to obtain large loans by using a property as collateral (usually their home). With these loans, customers can get much more than normal, allowing them to fund a range of things such as business investments and the purchase of other properties.

Although when some people first consider secured lending it can seem a little intimidating putting your home up as security, it’s become increasingly popular recently as the UK property market has become almost white-hot with activity. Purchasing buy-to-let properties, funding developments, starting new businesses, there are a range of things you can use them for that you wouldn’t be able to with an unsecured loan with a traditional lender.

Due to the popularity of the UK property market right now, lenders have massively expanded their product ranges and are keen to increase their exposure to the UK market, meaning we’ve got access to more lenders than ever before from all over the world. If you’re looking for a bit more information, we’re regularly available to talk, and you can make an appointment with us at your convenience.

Here, we’ve put together a short guide for you to understand this in more detail.

What does “first charge” mean?

A ‘first charge’ on a property is a term that means that, in the event of your loan not being repaid or defaulted on, they have first priority over the asset, or security.

As an example, if you own your house outright, and take a bridging loan secured against your property, the bridging loan company has first priority over that asset to claim back the outstanding amount you owe.

Are first charges used on property?

Usually they are, yes, however, it can also include other high value assets such as a valuable car, valuable jewellery, or other assets that a lender may agree to lend you money on.

Their most common use, as mentioned, is on properties, as they’re usually the most valuable asset available to borrowers to be able to secure a larger loan if they need it.


Benefits of a First charge loan

A second charge loan, or mortgage, can be very attractive to our clients looking at ways to raise higher amounts of capital, and here are a few benefits of such an arrangement.

  • Longer Term

Because this is designed as a mortgage of types, these loans can be drawn out over a longer time period, meaning they’re not quite as difficult to repay, as opposed to higher short term repayments. This is attractive for clients looking for a larger sum loan but without the means to pay larger short term payments.

  • Flexible Payments

Many of our clients like the fact that with a second charge loan or mortgage you’re often able to make higher repayments and repay the loan early if you’re in a position to do so. This means that when you’re in a better position, you’re able to shorten the length of time you’re paying for.

  • Higher rates of borrowing

You’re able to borrow more with this type of lending, compared to unsecured lending where you’re much more limited on what you can apply for.

  • More flexible credit requirements

If your credit report or your credit file is less than perfect, then providers of second charge loans are much more willing to provide you credit than if you go for unsecured lending.


First charge mortgage calculator

A second charge loan, by comparison, is where the lender gets second preference over a property or asset. Of course, it’s a bit more difficult to secure these types of loans due to the fact that lenders aren’t first priority should your loan default, however, they’re still available and we have many lenders within our panel that will consider you.

To give you an idea of what you may qualify for, and what it may cost, we’ve included a mortgage calculator so that you can have a play with the amount, the deposit, the rate of interest and the length of time you want to repay over.


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Which is a better first or second charge loan?

Realistically neither is specifically better, in that they both operate largely in the same way, have the same terms, and serve the same purpose.

That being said, it’s harder to get a second charge mortgage or loan compared to a first charge mortgage. That’s due to the fact that it’s lower risk for lenders to be first in the queue for your asset than second, however, we have plenty of lenders on our panel that are happy to lend on a second charge as well as a first charge mortgage.

With that in mind, it’s also broadly true that you’re likely to get better rates with first charge mortgages as they’re considered less risky. So realistically, there isn’t a better or worse version, but a first mortgage is considered less risky.

What does the process look like?

First and foremost you’ll need to speak to one of our brokers that can get a little bit more information from about what you’re looking for, what type of amount you need and how many years you want to repay the loan over.

Secondly, you’ll need to be able to provide proof of your identity, your income, and potentially also your credit rating or credit file too. Once we’ve established these details, we’ll shop the market for you and present you with the best deals from our panel of lenders.

An agreement will be drawn up in principle, and you’ll then need a solicitor to finalise the loan and any finance, and once the legalities have been formalised the funds will be released to you.

First charge mortgage lenders

We have a large and diverse panel of lenders happy to work with our clients for a mortgage, and we have access to lenders that you wouldn’t be able to reach through traditional means. We work with, for example, investment funds, pension funds, foreign banks and investors as well as more traditional UK lenders.

We’re strategic partners with a number of these lenders who can offer our clients exclusive deals on first charge mortgages. Due to our experience, and the amount of time we’ve been working with these lenders, we’re often able to provide you with preferential rates and terms compared to if you went down the traditional route.

We’re also a highly experienced broker service, so we’re able to provide you with advice that you won’t get anywhere else, as well as helping to make the process as quick and seamless as possible.

Speak to our expert second charge loans brokers today

If this is something you’re interested in, then get in touch with one of our brokers today who can run you through the process and get you approved for your mortgage.